Start of a turnaround?
In another sign of improving agribusiness sentiment, two listed companies have lifted their forecast earnings for the year.
PGW, majority owned by Chinese company Agria Corp, has paid an undisclosed sum for the two companies, bought from Swiss multinational Pentair.
PGW chief executive Mark Dewdney says the acquisitions will complement the irrigation business his company has built for 30 years. “Our existing irrigation business unit is set to continue to achieve strong growth.”
The purchase of Water Dynamics and Aquaspec, with combined revenues of $14 million, will add much to the services PGW can provide to farmers and growers, Dewdney says.
“Water Dynamics gives us an expanded footprint in parts of the country where we [are not] in irrigation, including Hawke’s Bay, while the Auckland branch gives us direct access into Waikato.
“Aquaspec’s wholesale import and distribution business will add greater vertical integration, and give our customers access to [many extra] brands.”
Many large-scale community water schemes are at the consenting and feasibility stage, PGW points out. Schemes in Wairarapa, Central Hawkes Bay and north, central and south Canterbury, in planning for years, are making progress.
And in July the Government established Crown Irrigation Investments Ltd, an $80 million company to help advance irrigation projects that may otherwise struggle.
Irrigation New Zealand and MPI estimate that in 2010, 620,000ha was under irrigation. This could be increased to at least 1 million ha given the available water resources, topography and demand, PGW says.
Last summer showed the need for water management to “mitigate the impact of drought on the rural sector,” Dewdney says. “Clearly those farming districts with reliable irrigation during last year’s widespread drought managed far better than those without.”
Water Dynamics and Aquaspec have 45 staff in branches at Auckland, Hastings, Christchurch and Cromwell.
They will join PGW’s irrigation business, with 70 staff, and revenue of $45.1 million in the June 2013 financial year, up from $29.8 million the previous year.
